Sunday, July 21, 2013

LEADERS&ENTREPRENEURS

Fast pivot unlocks MedaCheck's potential

'Jeffrey Shepard of Medacheck is going far beyond the virtual pillbox idea he launched with the help of Innov8 for Health last year. The Cintrifuse resident and his CTO have created a physical product for seniors who must take a variety of pills each day. The product works like a stripped down smartphone and helps seniors manage their daily medication.' July 1, 2013. The Enquirer/Adam Birkan

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The hard facts

Internet and tablet usage among MedaCheck’s target audience illustrate the challenges that come with leveraging technology to improve health care, and explain MedaCheck’s move into hardware. According to a 2012 Pew Research Center’s Internet & American Life Project study: 53% of American adults who are 65 or older use the Internet. 77% who are 50-64 use the Internet. 3% who are 76 or older use tablets. 8% who are 65 or older use tablets. 14% who are 50-64 use tablets.

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Imagine spending the better part of a year validating your business model, roping in your best friend to develop the necessary software, raising a seed round of capital from outside investors – and suddenly realizing almost nobody will use the product you’re building.

Meet Jeffrey Shepard, chief executive officer of MedaCheck LLC, a startup that was launched last year through Innov8 for Health, the regional program driving innovation in the health-care market.

MedaCheck’s business model is simple and powerful: Use technology to help seniors and their caretakers manage daily medication through a Virtual Pillbox.

The Virtual Pillbox was originally designed as an app for tablets and smartphones that would alert seniors to take their medication and remind them to order refills.

Then one night in January, Shepard and his team realized they had a big problem.

Their target market didn’t use apps. Research showed 8 percent of people over age 65 use tablets. It got even worse: Just 3 percent of people over age 76 use tablets.

“We had a million-dollar moment where we had a product that worked great, the software worked wonderfully, but they couldn’t operate the hardware,” he said. “We dug deeper, and said, ‘We’re missing something here.’ ”

MedaCheck decided to build its own hardware. Shepard gulped and told his investors, which include the Queen City Angels, about the pivot. The angels, which had initially encouraged him to consider a hardware element, loved it and put in more money.

“He quickly realized that the feedback he’d gotten was accurate and that he needed to address that in a tangible way,” said Queen City Angels investor John Habbert. “That’s a sign of a good entrepreneur. He wasn’t stuck in his vision. He accepted input from others, took it to heart, did his due diligence and figured out there was a better way.”

The optimism is paying off. Shepard has secured $500,000 in funding from investors including Queen City Angels. He says he just closed a beta testing agreement with one of the largest pharmaceutical companies in the world; a nondisclosure agreement prohibits him from naming the company.

MedaCheck’s strategic partners also include VRI, the Franklin-based provider of in-home medical monitoring, and Cedar Village, a retirement community in Mason.

MedaCheck in danger before it even got started

MedaCheck was the perfect candidate for Innov8 for Health, which recognizes health-care innovation is more critical than ever, thanks to the Patient Protection and Affordable Care Act. That legislation, in part, ties Medicare reimbursements for hospitals based on re-admittance rates and patient feedback.

MedaCheck is designed to ensure seniors take the right medications, in the right doses, at the right times. In theory, it should decrease patient-doctor visits for the same symptoms and improve patient health and satisfaction. But it’s meaningless if, at best, 92 percent of the target market never uses it.

Tablets may be the future of computing, but the lack of tablet and smartphone adoption among seniors was threatening to kill MedaCheck before it got started.

Shepard said MedaCheck’s hardware had to be simple, which invariably made it harder to design. Shepard’s requirements:

• The device had to turn on as soon as it was plugged in and have a high-resolution screen so customers could easily identify their pills. MedaCheck has more than 150,000 medications in its database, and more than 46,000 high-resolution pictures.

• It had to be equipped with 3G, since Shepard found many of his potential customers don’t have wireless Internet access.

• Nothing would be programmed from the device. It would pick up information from MedaCheck’s software, which is where caregivers or pharmacies program a client’s regimen of pills. The hardware takes that information and alerts customers to take the right medications at the right time.

Shepard is a huge fan of Jonathan Ive, the legendary Apple designer who values form as much as function, but his inspiration for MedaCheck’s hardware came from a less obvious product: The toaster.

“We had to make it as easy to use as a toaster. I became passionate about toasters. It’s all about design, and how can you make something so easy to use, and that’s the mantra of our company: ‘We make the complex simple,’ ” Shepard said.

Elegant solution to a complex problem

Shepard leveraged various resources throughout the region. MedaCheck, which has offices at the Hamilton County Business Center in Norwood, also works out of Cintrifuse’s Downtown space, where fellow client 3DLT made 3-D printouts of working designs for the product.

Students at the University of Cincinnati’s College of Design, Architecture, Art, and Planning helped with the design. 3D Vision Technology in Mason helped build the prototypes. It’s manufactured in China and costs between $149 and $169. Monitoring fees run $30-$40 a month.

The result is an expanded business model just seven months after MedaCheck made the pivot. The device and a monthly subscription service will provide MedaCheck a revenue stream. The goal remains the same – 100 percent patient adherence to their medications – but the device is only part of the solution. The real value, Shepard says, is MedaCheck’s back-end support.

MedaCheck’s hardware beeps when it’s time for the patient to take his medication. The patient must touch a button on the machine to confirm the dosage was taken. If there is no confirmation, MedaCheck’s software alerts caretakers via text message or email. Caregivers can also monitor the patient’s activity and follow his daily regimen through an app.

One of MedaCheck’s partners, VRI, can take things one step further. VRI will call the patient, then the caregiver, if there’s no confirmation that the patient took his medication. VRI CEO Chris Hendriksen said he likes MedaCheck’s elegant solution to a complex problem, both on the software and hardware side. VRI’s clients take an average of 14 different medications a day and want help to manage that complex regimen.

“What we tend to see in the technology world is somebody has created a device and they start adding features and buttons, you can post to Facebook and tweet off of it, all this stuff that an 85-year-old doesn’t need,” Hendriksen said. “I love that it’s a very functional, durable thing. It’s not scary, it’s easy to use.”

Shepard’s strategic partners are helping him test the product, and could form the foundation of a supply chain that will get MedaCheck’s product in front of customers.

If the beta tests are successful, MedaCheck will begin to raise a Series A round of funding to scale his business with a current target of between $4 million and $6 million.

Habbert, the Queen City Angels investor, said Shepard’s story, and quick pivot, are examples of why Queen City Angels focuses on entrepreneurs as much as the business model when considering an investment. But even he was surprised at how quickly Shepard executed after making the pivot.

“He surprised me with his creativity and his ability to quickly pull that together at a cost point which makes it marketable, and very simple and elegant design which makes it useable,” Habbert said. “I was quite pleased when I saw the direction he was going. He really thought it through well.” ■

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